TECHNICAL PAPER Profit optimization in machining service providers using principles of the Theory of Constraints Elesandro Antonio Baptista • Wagner Cesar Lucato • Nivaldo Lemos Coppini • Fernando A. P. da S. Fortunato Received: 23 November 2011 / Accepted: 20 August 2012 Ó The Brazilian Society of Mechanical Sciences and Engineering 2013 Abstract This paper proposes a method for machining service providers to determine cutting speeds that could maximize their financial returns. This is done based on measures considered by the Theory of Constraints (TOC). It starts by defining the cutting parameters and their rela- tionship to the machining costs. Also, TOC principles are examined in relation to the financial gains obtained as a result of the bottleneck analysis. Next, this paper proposes to combine both sets of concepts in such a way that a relationship between financial gains and cutting speed is established. A graphical solution identifies the cutting speed that maximizes the financial gains for a given part at the bottleneck equipment. Finally, a linear programming approach expands the concept for real-life situations where several different parts are machined at several machining equipments. Hence, this approach could be helpful to machining service providers for maximizing their profitability at the same time they fully utilize their bot- tleneck equipment, in line with TOC principles. Keywords Machining process  Theory of Constraints  Profit planning Abbreviation ABC Active-based cost CCR Capacity constrained resource d Part diameter (mm) d n Quantity of a given part required by client (parts/ week) E m Floor space occupied by the machine tool (m2) f Machining feed (mm/rot) FG Finish goods H Average machining working hours per year (h/ year) I Investment i m Tool machine current age (year) j Annual interest rate K Constant in the Taylor’s tool life equation K e Annual floor space cost ($/m2) K ft Tool edge cost ($) K ftu Tooling cost ($/part) K fup Remaining tooling cost ($) K m Tool machine annual maintenance cost ($/year) K p Machine cost ($/part) K pi Insert cost ($) K uf Tooling cost ($/part) K um Tool machine cost ($/h) K us Labor cost ($/part) l f Cutting length (mm) M Expected life for the tool machine (year) MEI Maximum efficiency interval MP u Direct material cost per part ($) Technical Editor: Alexandre Abra ˜o. E. A. Baptista (&)  W. C. Lucato  F. A. P. da S. Fortunato Universidade Nove de Julho, Programa de Mestrado em Eng. de Produc ¸a ˜o, 05001-100 Sa ˜o Paulo, SP, Brazil e-mail: Elesandro@uninove.br W. C. Lucato e-mail: wlucato@uninove.br F. A. P. da S. Fortunato e-mail: fortunato@uninove.br N. L. Coppini College of Mechanical Engineer, State University of Campinas, Campinas, PO 6122, SP, Brazil e-mail: nivaldocoppini@gmail.com N. L. Coppini Mechanical Engineer Post Graduation Program, Taubate ´ University, Taubate ´, SP 12060-440, Brazil 123 J Braz. Soc. Mech. Sci. Eng. DOI 10.1007/s40430-013-0028-8